Make an Enquiry
Contact Us

No tax crackdown on agency social workers yet, but change is afoot

New duty on public sector to check contractors' tax status and umbrella company employees to lose out on expenses from this month.

Predictions that agency social workers could be targeted by an HMRC drive to root out ‘false self-employment’ have proven unfounded, but change is afoot in the wake of March’s Budget, experts have told Community Care.

At the end of 2014 we reported on warnings that the tax authorities could be taking a keen interest in social workers who might fall foul of its IR35 rules, which are used to define whether someone is an employee or self-employed.

This hasn’t come to pass. But in his recent budget Chancellor George Osborne announced that public sector organisations will now be responsible for ensuring that personal services companies they engage – such as those used by some independent social workers – pay the correct level of tax.

Assignment by assignment

Limited companies, via which individuals take out their earnings as dividends, are subject to lower rates of tax than employees or sole traders.

The new duty will come into force in April 2017 after the government consults on a “clearer and simpler set of tests and online tools”, Osborne said. Independent social workers operating in the voluntary or private sectors will be unaffected by the changes.

Nicola Anderson, head of accounting at specialist social work accountancy firm Boox, told Community Care that it was so far unclear exactly how locum social workers working in councils and the NHS would be affected. “We won’t know what happens until after the consultation is over later in the spring,” she said.

Anderson reiterated that social workers’ IR35 status is a case-by-case – or assignment-by-assignment – affair that depends on the contract they have with an employer or agency.

IR35

The status hinges on whether, disregarding the personal services company, the contract between contractor and client mirrors that of employer and employee.

A number of factors, including the level of control, requirement for personal service, mutuality of obligation and whether the contract reflects actual working practises, determine this. But being expected to work certain hours and undergoing supervision are not in themselves enough to make workers fall foul of IR35.

Debbie Smith, chief executive of recruitment agency Caritas and social work sector chair at the Association of Professional Staffing Companies, said locum social workers are continuing to work under a “multitude” of setups.

“Some are PAYE, some work for umbrella organisations and others operate under personal services companies – we haven’t seen major changes in our contractor base during the last six to 12 months,” she said.

Various roles

With agency social workers undertaking a wide variety of different roles, Smith added that it would be “dangerous” for HMRC to apply a broad-brush approach around IR35.

“We wouldn’t tell candidates to go one way or the other, but we do make clear what the requirements are,” she said.

An HMRC spokesperson said: “HMRC continues to look at ways to improve its compliance activity on IR35, but we don’t comment on identifiable groups.”

Travel expenses

One section of the locum workforce will, however, be affected by tax changes from this month.

From 6 April 2016, agency social workers operating via umbrella companies and subject to ‘supervision, direction and control’ will no longer be able to claim tax relief on travel or subsistence expenses. For some, particularly those travelling longer distances, this will equate to a noticeable drop in take-home pay.

Workers affected by the changes may want to review their circumstances but should avoid making any hasty decisions, according to Anderson.

“Some social workers are moving from the umbrella route to personal service companies, but they shouldn’t do that based on tax alone; it has to be a rational process,” she said. “You need to consider whether it’s best thing for you, as as you’ll also have to look after your own holiday and sick pay, and so on.”

Story courtesy of Community Care

Working Together For Children

Make an enquiry

A multi-disciplinary organisation providing independent, high quality social work, psychological, psychiatric, therapeutic and family support services. Contact us with your requirements and speak to a member of our team who will help you today.
Make an Enquiry

Knowledge & Resources

Keep abreast of the latest news in the children's services sector.

Social workers urged to support fathers at risk of causing harm to children

16/09/2021

Social workers, midwives and health visitors are being urged to provide more support to fathers following an independent review into safeguarding children under one year old from non-accidental injury caused by male carers.

The independent Child Safeguarding Practice Review Panel’s latest review looks at the lives of babies who were known or suspected to have [...]

Read Full Story

Child sexual abuse found in most major religions in UK

16/09/2021

‘Blatant hypocrisy and moral failing of religions’ has been highlighted following an investigation which found child sexual abuse had been found in most major religions in the UK.

The Independent Inquiry into Child Sexual Abuse report ‘Child protection in religious organisations and settings’ examined evidence received from 38 religious organisations with a presence in England [...]

Read Full Story

Significant shift needed in adoption system

15/09/2021

There should be a significant shift in thinking about the adoption system in order to provide better support for some of England’s most vulnerable children, the All Party Parliamentary Group on Adoption and Permanence has urged.

Following a three-month inquiry, the APPGAP has launched a report calling for a system-wide move from ‘family finding’, the [...]

Read Full Story
Children First is an online resource for professionals working with children presented by WillisPalmer, providing you with the latest news, features and interviews.
Subscribe Today
Delivering a diverse, reliable range of services to children and their families across the UK
D1, Parkside, Knowledge Gateway, Nesfield Road, Colchester, Essex CO4 3ZL
Contact Us
WP Quality Assured

A Mackman Group collaboration - market research by Mackman Research | website design by Mackman

closechevron-downbars linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram